The phenomenon of ‘cryptoart’, digital artwork treated like physical art through verified ownership of the piece using non-fungible tokens (“NFTs”), continues to thrive. In recent years, a large number of NFT galleries have appeared across Latin America with Argentina having some of the most developed galleries including Carnival, Kephi Gallery, Aura, Diderot and BAG.
Carnival.Art, considered the first NFT gallery in the region, was set up by three partners with previous experience in the tech industry. The gallery, built on Bitcoin and RSK smart contracts attracted artists from all over Latin America to exhibit 210 art pieces for auction. Also in Argentina, in the early stages of the Covid-19 pandemic, four friends launched Kephi Gallery with the support of 30 investors which raised the initial USD 100,000 of the total USD 6 million funds that the gallery obtained.
Despite setbacks in the global cryptocurrency markets, the NFT market in Latin America has continued to grow as artists have become more interested in digitalising their work. Fernando Duhart, founder of the Mexican NFT project @skeletonawkward said that the boom in the sector was accelerated by the increasing number of conferences, associations, clearer regulations and the economic recovery that the region experienced in 2021.
In parallel, several countries in Latin America have significantly advanced in crypto-regulation with Uruguay and Colombia being ahead of their neighbours. Earlier this year, Uruguay announced that it was working towards the regulation of cryptocurrencies while Colombia released new rules for cryptocurrency companies to operate in the country. But the regulation of cryptoassets still needs to be addressed by local governments as their trade increases the risk of consumer fraud, theft and money laundering.
A collector of contemporary art in Argentina commented, “In terms of regulation, there is a strong need for an international convention to be ratified by all countries involved. In the meantime, the common rules of civil law, intellectual property law and some commercial laws apply, but they will probably not be able to cover the number of issues related to the operation of these digital art galleries.”
“In terms of regulation, there is a strong need for an international convention to be ratified by all countries involved.”
Collector of contemporary art, Argentina
Trust is perhaps the most significant barrier to overcome, explained an NFT gallery owner, “Transparency is fundamental because there are many people who distrust and are afraid to invest in NFTs, bitcoins, cryptocurrencies and therefore in NFT galleries. They are afraid of not knowing who has their investment, of not knowing if a hacker is going to come along and take it. People still have more confidence in what they can touch and control more directly. Although it may be more insecure in practice. Other important challenges are the environmental issue and guaranteeing authenticity but many of us are working on solutions to these problems.”
“Transparency is fundamental because there are many people who distrust and are afraid to invest in NFTs.”
NFT gallery owner, Argentina
NFT galleries promise a new audience and new revenue streams for artists and the democratisation of collecting for consumers but there are still significant legal, environmental and cost issues to overcome. Many lessons have been learned from the digitalisation of the music industry but will NFTs enable the art world to follow suit?